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Reforming the Postal Sector in the Face of Electronic Competition

Reforming the Postal Sector in the Face of Electronic Competition

Advances in Regulatory Economics series

Edited by Michael A. Crew and Paul R. Kleindorfer

In our increasingly technology-focused world, demand for traditional postal services is steadily shrinking. This timely volume examines the many challenges that the worldwide postal sector is facing as a result of growing electronic competition, and offers expert recommendations for reshaping postal structures to strengthen their competitiveness in an electronic age.

Chapter 2: The UK Postal Services Act 2011

Richard Eccles

Subjects: economics and finance, public sector economics


The Postal Services Act 2011 came into force on 1 October 2011, setting out the framework for a new UK postal regulatory regime replacing the regulatory provisions of the previous legislation, the Postal Services Act 2000.2 The 2011 Act makes the safeguarding of the universal service the main regulatory priority. It significantly relaxes the regulatory controls on Royal Mail mainly by reducing the scope of the universal service to exclude bulk mail and by relaxing pricing controls, and by replacing the previous regime on downstream access to Royal Mail’s network by a more limited set of controls. The overall result is a considerably more flexible regulatory regime for the incumbent postal operator, Royal Mail. The 2011 Act also provides for a restructuring of Royal Mail Group as a basis for possible privatization, and a framework for the modification and reform of the Royal Mail pension plan. The specific regulatory controls under the 2011 Act are contained not in the act itself but in the regulatory conditions which have been imposed by the new postal regulator, Ofcom, under the enabling provisions of the act. The regulatory regime introduced by the 2011 Act has a number of important features. First, it makes Ofcom the postal regulator, with the primary duty of securing the provision of the universal postal service on a financially sustainable basis. Second, it introduces a system of general authorization subject to regulatory conditions imposed by Ofcom, in place of the requirement for a license that applied under the 2000 Act.

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